Vendetta against Rundheersing Bheenick, Governor of the Bank of Mauritius

[Rafic Soormally]

Vendetta against Rundheersing Bheenick, Governor of the Bank of Mauritius

In his article « BANK OF MAURITIUS - The power struggle (I),(II),(III) & (IV) », le Mauricien 24,25,29 & 30 June 2009, although Professor Raj Mathur quotes the provisions of the Bank of Mauritius Act 2004 at great lengths with respect to the responsibility and accountability of the Bank’s Governor, Mr Rundheersing Bheenick, and states that, under the Act, « the Minister can no longer give any instruction to the Bank », he contradicts himself when he says « in the event of a major disagreement between the Finance Minister and the Governor of the Bank of Mauritius, it is the latter who must give in ». He also appears to be envious of the Governor’s « fringe benefits and [..] per diems », which are perfectly within the law. Surely, the Governor of the Central Bank cannot be expected to have peanuts as fringe benefits! Again, without quoting the relevant provisions of the Act, he utterly confuses the political system of Ministerial collective responsibilitywith how the Board of the Central Bank and the Council of the University of Mauritius conduct their affairs, and asks « Can the governor hold on to his post? » by alleging that he had « lost the confidence of his Board of Directors » and that he should resign. If this is not a « personal vendetta » against the Bank’s Governor, one wonders what it is !

Section 17 of the Act states that « A person shall be disqualified from holding the office of Governor, Deputy Governor or other Director if he - (a) is employed in any capacity in the public service or holds any office or position for which any salary or other remuneration is payable out of public moneys; (b) is a director, a partner, an official, an employee or a shareholder of any bank or other financial institution; (c) has committed any default or breach of trust or is guilty of serious misconduct in the discharge of his duties under this Act which, in the opinion of the President or Minister, as the case may be, renders him unfit to be appointed or to continue in office; (d) has been convicted of an offence of such nature as, in the opinion of the President or Minister, as the case may be, renders it desirable that he should be removed from office; or (e) is suffering from such mental or physical infirmity as to render him unfit to discharge his duties under this Act. » The ground of ‘lost of confidence by the Board’ is a mere invention of Raj Mathur for political reasons as, through propaganda, he is clearly trying to force the Bank’s Governor to resign. Moreover, although Mr Mathur was quick to point out that the Governor is answerable to the Board under the Act, he does not mention that the Board has no power to dismiss him. Only the relevant Minister can make such recommendation to the President.

Mr Mathur begins his article with the « non-stop infightings » (over more than a year) between the Bank’s Governor and the Board of Directors, when the Governor also forms part of the Board. Directors other than the Governor and Deputy Governors are referred to as « other Directors » under the Act. He also speaks of heated discussions between two groups « especially with regard to the approval of the Budget and the salary review of staff and the restructuration of the Bank », but he does not give a proper insight into the relevant facts. To take one example, in accordance with Section 25 of the Act, the Board of Directors had commissioned a study by the independent experts of Negara Bank Malaysia and consultants from the Group Hay of South Africa to report and make recommendations, inter alia, on the restructuring at the Central Bank. Bank Governor Mr R Bheenick accepted the experts’ recommendations but, for reasons best known to themselves, a simple majority of the Board rejected both Reports in toto. The Governor felt that the dissenting Directors had acted unlawfully. Instead of arguing « lost of confidence », Mr Mathur should have asked himself first and foremost whether the dissenting Board members have acted in « good faith » when rejecting the recommendations of the consultants whose appointment they approved under the Act. The appointment of consultants for the restructuring exercise has clearly become the policy of the affairs and business of the Bank [Section 12]. In rejecting their recommendations, the dissenting Directors have also rejected the policy of the Bank as entrusted to them. There may well be a case against them under Section 17(c) of the Act. This vital element is totally absent from Mr Mathur’s 4,280 worded article. Why?

A restructuring exercise is always very painful for any organisation as it involves redundancies, movement of staff, dismantling of empires, and so on. Conspiracies to torpedo such an exercise are not uncommon. It takes a strong and steadfast team to see it through. This team is clearly lacking at the Bank of Mauritius. According to Mr Mathur, there is a power struggle « between the Governor and the Minister par personnes interposées (the Directors of the Bank) », thus implying that Finance Minister Rama Sithanen is interfering in the affairs of the Central Bank through the dissenting Directors. Given Mr Mathur’s own assertion, how can he subsequently speak of « the independent-minded personalities of the Board » (the dissenters) under such circumstances, and even argue that the Governor should « give in » and « resign »? As he effectively points out, the dissenters have the backing of the Finance Minister. Hence, it is the Finance Minister who should resign or be removed from office. Mr Mathur did wonder why the Finance Minister (and others) had not even « thought of stepping down from office »!

The Governor and Deputy Governors are appointed by the President on the recommendation of the Prime Minister, while the « other Directors » are appointed by the Finance Minister. Consequently, it is incumbent upon the Prime Minister and the Finance Minister to summon their respective Deputy Governor/s and « other Directors » in order to establish the motives for their dissention and take any necessary action, including making recommendation to the President, if it is felt that they are in breach of the Bank’s policy and guilty of misconduct. Since, as argued by Mr Mathur, there is interference by the Finance Minister, through personnes interposées, in the affairs of the Central Bank in a power struggle with the Governor, the Prime Minister may well decide, by Cabinet decision, to appoint an independent committee to look into the matter and make recommendations. It looks as if the dissenters’ bitterness is also spilling over to other matters, such as the Bank’s Budget and the affairs of the Monetary Policy Committee in a clear attempt to undermine the Governor. The Central Bank is too important an institution for the Government to allow such a situation to persist. The Governor is « responsible for the execution of the policy of the Board and the general supervision of the Bank » [S13(3)]. It is very strange that while he is executing the restructuring policy, certain members of the Board are against it, presumably because the recommendations are not to their liking or because they have been asked to do so. The dissenters’ desire to have a third ‘independent’ report is suspicious, counterproductive and of no value unless they obtain 3 other reports to counteract the original 2 they are refusing to accept. In his supervisory role, the Governor would have submitted his own reports and made recommendations to the Prime Minister and the Finance Minister. There is no question for him to « resign ». It is up to the government to resolve this conflict by taking appropriate action.

M Rafic Soormally
London
30 June 2009

REPLY TO RAJ MATHUR emailed to Gilbert Ahnee of le Mauricien on 30 June 2009